8. A company is considering building a bridge across a river. The bridge would cost €12 million to build and nothing to maintain. The following table shows the com- pany's anticipated demand over the lifetime of the bridge: Number of crossings (in thousands) Price per crossing (€) €8 7 100 200 300 400 500 600 700 800 a. If the company were to build the bridge, what would be its profit-maximizing price? Would that be the effi- cient level of output? Why or why not? b. If the company is interested in maximizing profit, should it build the bridge? What would be its profit or loss? c. If the government were to build the bridge, what price should it charge for passengers and vehicles to use the bridge? Explain your answer. d. Should the government build the bridge? Explain. 6543210

ENGR.ECONOMIC ANALYSIS
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Chapter1: Making Economics Decisions
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8. A company is considering building a bridge across a
river. The bridge would cost €12 million to build and
nothing to maintain. The following table shows the com-
pany's anticipated demand over the lifetime of the bridge:
Number of crossings
(in thousands)
Price per crossing (E)
€8
7
100
200
300
4
400
3
500
600
1
700
800
a. If the company were to build the bridge, what would
be its profit-maximizing price? Would that be the effi-
cient level of output? Why or why not?
b. If the company is interested in maximizing profit,
should it build the bridge? What would be its profit or
loss?
c. If the government were to build the bridge, what price
should it charge for passengers and vehicles to use
the bridge? Explain your answer.
d. Should the government build the bridge? Explain.
Transcribed Image Text:8. A company is considering building a bridge across a river. The bridge would cost €12 million to build and nothing to maintain. The following table shows the com- pany's anticipated demand over the lifetime of the bridge: Number of crossings (in thousands) Price per crossing (E) €8 7 100 200 300 4 400 3 500 600 1 700 800 a. If the company were to build the bridge, what would be its profit-maximizing price? Would that be the effi- cient level of output? Why or why not? b. If the company is interested in maximizing profit, should it build the bridge? What would be its profit or loss? c. If the government were to build the bridge, what price should it charge for passengers and vehicles to use the bridge? Explain your answer. d. Should the government build the bridge? Explain.
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